March 27 (Reuters) - Australian shares skidded on Monday after two sessions of gains as the region followed Wall Street's fall on news of the collapse of President Donald Trump's healthcare reform package.
Trump suffered a stunning political setback on Friday when Republican leaders pulled legislation to overhaul the U.S. healthcare system.
Investor sentiment was hit by the failure of Trump's legislative debut which put in question his ability to get other key parts of his agenda, including tax cuts, through Congress, but also the Republican Party's ability to govern.
"I think the market is taking its cues from the currency market at the moment, we are seeing U.S. dollar weakness against both euro and yen," said Michael McCarthy, Chief Market Strategist at CMC Markets.
"We may well see a much more severe reaction (to the failure to pass the healthcare legislation) in U.S. share markets when they reopen tonight"
The S&P/ASX 200 index fell 0.5 percent to 5,725.8 by 0030 GMT, tracking U.S. equity index futures which fell to a six-week low on Sunday.
The Australian mining and basic materials indexes lost 1.6 percent and 1.5 percent respectively in early trade.
Chinese steel and iron ore futures fell for a fourth day on Friday, adding to a near week-long selloff that led to both commodities posting their biggest weekly drop in three months.
"Although commodities are overall mixed and in fact copper moved ahead and oil is higher, we did see pressure on iron ore prices on Friday night. That of course speaks directly to some of the major miners here," said McCarthy.
Iron ore miner BHP Billiton fell 2.6 percent while Mining giant South32 Ltd lost 2.4 percent.
The end of a historic strike at Chile's Escondida copper mine, the world's biggest, has left its owner, BHP Billiton, nursing an estimated $1 billion loss.
The financial index dropped 0.5 percent, with the "Big Four" banks falling between 0.3 percent - 0.5 percent.
Bucking the trend, the gold index gained 1.6 percent on higher gold prices.
New Zealand's benchmark S&P/NZX 50 index rose 0.2 percent, or 11.98 points, to 7,085.81. The index was on track for its third consecutive session of gains, led by utilities and telecom stocks.
Electric utilities company Meridian Energy Ltd rose 1.1 percent, while Spark New Zealand Ltd gained 0.9 percent.
A2 Milk was the biggest gainer on the index, rising 2.5 percent, to close at an all-time high.
Reporting by Sandhya Sampath in Bengaluru; Additional reporting by Christina Martin; Editing by Eric Meijer